Remember when airlines first began adding baggage fees? 

At first, it seemed incredulous that an airline would charge loyal customers for what had once been a free service. Then it became common practice. Consumers came to expect it, just as they came to expect their seat size to shrink and their in-flight snacks to disappear (it’s hard to say which was more disappointing!). 

A similar phenomena has started occurring amongst businesses across the country: credit card surcharging. Just this year, Hilton began adding a “credit card surcharge tax” to its guests’ ledgers– a fee associated with using a credit card for rewards as opposed to a debit card or cash. And they’re not alone. 

In the era of pandemic recovery, many businesses are looking for ways to contain costs. With recent changes to the laws surrounding credit card surcharging, passing along that 3% fee has become one of the easiest ways to cut unnecessary expenses. 

And why shouldn’t they? 

Rewards cards are all the rage, incentivizing consumers to use a credit card for larger purchases even if they have the cash on hand in order to reap the benefits of 1%, 3%, even 5% cash back. But that benefit results in a cost that the bank sponsoring that card will require of someone. Businesses, large and small, have had to bear the brunt of that cost as they had no legal means to pass it on.  

Recently, the Supreme Court upheld a ruling on a case filed on behalf of businesses to legally (and compliantly) allow surcharging. As a result, 48 states have passed legislation making it legal to surcharge, while allowing consumers choice – to pay the surcharge for the privilege of using their rewards card or pay no fee if using a debit card or paying with cash. 

Surcharging technologies now make it possible for businesses to compliantly pass on the interchange to their customers. But, businesses should beware: a number of companies claim to enable you to surcharge, but don’t do so in a compliant manner, leaving them exposed to lawsuits and fines. 

Businesses have enough to contend with, especially given the pandemic. Claiming back the 2.5% to 3% that otherwise went to banks as interchange cost is one way to help not just stay afloat but, perhaps, make a profit.